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pray pay unto Charles Duncombe, Esq., for the government; the amount which or order, the sum of four hundred was actually subscribed by the public pounds, and place it to the accompt of to the foolish project was £2,100. No your assured friend, WINCHESTER. To better criterion of the shrewdness of Captain Francis Child, near Temple the commercial community of that day Barre.” This was a remarkably close could be desired than the respective approach to modern usages, and it was issues of these two undertakings. too valuable a reform to be lost. If, At its first establishment the inexpeindeed, a public bank had been pro-rience of its founders was by no means jected on the foreign model, it would, the worst peril which the bank had to although of narrower utility than that encounter. It was surrounded by enewhich was eventually established, have mies whose opposition arose partly served a useful purpose as a place of from political, and partly from selfish safe deposit, the wapt of which was motives. The goldsmiths, in whose then keenly felt. To provide such a hands the banking of London, such as place was beyond the resources of the it was, had developed into a most goldsmiths, while the action of both profitable trade, were naturally disCharles the First and his successor had posed to set every obstacle in their demonstrated that money deposited rival's way. They contended that an either in the mint or in the exchequer institution on so large a scale was was liable to be arbitrarily borrowed, likely to assume the control of all finanor confiscated, by the king. Those cial business to a degree most threatwho projected the Bank of England ening to the common interests of the had thus two precedents or models to country, and to attain so much power guide them, and they may be said to as would give to it a dangerous auhave combined the advantages of both, thority and influence even with the for with the massiveness of the great national government. They pretended foreign institutions they united the to foresee that as soon as it was firmly freer practice of the Lombard Street established, it would so raise the rate goldsmiths.
of interest as to cripple industry, while When at length, in June, 1694, the filling its own coffers by usury. And scheme was placed before the public, in this there was no doubt some reathe necessary capital was forthcoming son, for many of them had grown with what must have appeared in those wealthy by the very methods they now times a startling rapidity. Three days denounced. Some of them employed after the books were opened more than their means freely in endeavors to emhalf was provided, and a week later, on barrass the bank, and their plots were Monday, July 2nd, the full amount of occasionally successful enough to bring £1,200,000 was subscribed.
It was their new rival into danger. One of manifest that the plan, which had met the most unscrupulous of its enemies with much opposition in both was Sir Charles Duncombe, who had Houses of Parliament, commanded at lately purchased a magnificent estate least the enthusiastic support of the out of the profits of his own banking city, where its merits could best be business. On one occasion he is said judged, and where alone could be found to have sold his entire holding of bank the funds to carry it to a successful stock, amounting to £80,000, in order issue. Very different was the fate to discredit its reputation, and, some which two years later befell the rival years later, to have conspired with scheme of Chamberlain's Land Bank. others to create a run by collecting and By its specious promises of universal presenting on one day £300,000 in prosperity it took both government notes of the bank. Another section of and Parliament captive, but fell dead its foes consisted of the promoters of before the common
of the rival schemes. These plots ended in moueyed classes. The Land Bank un- failure, but they were only foiled by dertook to raise a loan of £2,564,000 | troublesome and expensive expedients.
VOL. III. 128
The real danger in these crises arose ties of mutual interest. If the former from the exceedingly limited reserve of had succumbed to its enemies and cash which the bank retained to meet James had returned, the latter might its outstanding notes. An account consider its capital as good as lost. On presented to the House of Commons in this ground, therefore, as well as from December, 1696, showed a debt on a genuine attachment to the principles notes issued, and on money deposited of the Revolution, its founders threw or borrowed, approaching £2,000,000, themselves with ardor into the Whig while the amount held against it in cause, and spent their resources lavactual money
than ishly in support of it. A political bias £36,000. The lesson had not yet been was absolutely inevitable in so imporlearned, that a bank must not rest con- tant an institution at such a crisis. tent with being actually solvent, but Burnet touches on the matter with his must hold its resources in a sufficiently usual shrewdness. " It was visible,' liquid form to enable it to meet large he says, “that all the enemies of the and sudden demands with absolute government set themselves against the promptitude. It was evident here, as bauk with such a vehemence of zeal a pamphlet of the day ingeniously and that this alone convinced all people accurately expressed it, that " the that they saw the strength that our bank confounded the credit of their affairs would receive from it." Bur. stock with the credit of their cash." net's criticism confirms the natural
But the bank bad other enemies be- inference that the line of political sides those to be found in the trading cleavage, which community. It was regarded from the strongly marked at any period of our first as a Whig institution, and a bul- history, was also the line which divided wark of the settlement of 1689. The the friends of the bank from its foes, merchants of the City, whose confi- The credit of successfully combating dence and support were the strength the opposition thus arising from many of the bank, were the Nonconformists quarters, is in great part due, Thorold and Liberals of the time. It was natu- Rogers shows, “to those honest, Godral enough, therefore, that an institu- fearing, patriotic men who watched tion which was thus committed to the over the early troubles of the bank, side of the existing government should relieved it, by the highest shrewdness have been hated by those who would and fidelity, from the perils it incurred, have rejoiced to see that government and established the reputation of Britoverthrown. The instinct which ish integrity.” But among its founders prompted the fervent opposition of the it is possible to distinguish two or three Jacobites a sound one, as was leading spirits, who in their different clearly proved before the new bank spheres contributed mightily to its suchad been long in existence. The loan cess, and were admirable representaof £1,200,000 to the government, in tives of the financial and commercial consideration of which the charter was skill of their time. granted, was only the first of many By the general consent of tradition important services to King William. the principal share in the original It was in itself an immense gain to scheme of the Bank of England is to have a strong and wealthy corporation be credited to William Paterson, a which might be resorted to by a needy native of Tinwald in Dumfriesshire. treasury, in place of the petty expedi- Paterson is unfortunately best remements which had hitherto prevailed ; and bered as the projector of the disastrous even in the first half-dozen years of its scheme for the colonization of Darien, course the bank had many opportuni- and his reputation has suffered accord. ties to give substantial proofs of its ingly. But even Macaulay, in his undevotion to the cause of the king. In sparing criticism of that wild venture, fact, the government and the bank has not denied its projector great natwere bound together by the strongest ural intelligence, a perfect kuowledge
of accounts, and scrupulous honesty. was “not so very high or impracticable Paterson had, in truth, the genius of ground but that a cut might likewise the pioneer, a mind bold, active, and be made were it in these parts of the fertile. His native gifts had been de- world, but considering the present cirveloped by a very varied experience of cumstances of things in those, it would life. After the best education his par- not be so easy.” It is a further proof ish school could afford him, his early of his judgment in matters of finance, manhood from the age of eighteen or that he perceived the mischiefs of thereabouts had been spent abroad, an inconvertible paper currency, and first on the Continent and afterwards wrote vigorously against its adoption. in America and the West Indies ; and In view of these facts, the theory of his writings, of which many remain, Paterson's
has been testify to his close observation of the sometimes accepted, that he was merely trade, finance, resources, and govern- a needy adventurer, first of all a pedlar ments of the countries he visited. in his native country, then a buccaneer From the very first his attention had in the West Indies, and finally an unbeen chiefly directed, as he himself trustworthy financial adviser of govtells us, to “matters of general trade ernments and a promoter of insane and public revenues.”
s In an inci- enterprises, is obviously untenable. dental passage of his works, Paterson All the circumstances of his life equally has written a description of the char- (liscredit it. Such a theory might be acter of an enlightened merchant, consistent with the fact that all Paterwhich gives us an idea of the kind of son's schemes did not make liim a rich man he himself aspired to be, one man, but it is contradicted by the re"whose education, genius, general spect and esteem which he enjoyed not scope of knowledge of the laws, gov- only in the West Indies, where his ernments, polity, and management of influence was great, but through the the several countries of the world, United Kingdom and on the continent allow him sufficient room and opportu- of Europe. It is further disproved by nity not only to understand trade as the confidence which was reposed in abstractly taken but in its greatest ex- him by the shrewd merchants and captent, and who accordingly is a zealous italists of London, whose colleague he promoter of free and open trade, and became on the directorate of the Bank consequently of liberty of conscience, of England, and by the support which general naturalization, unions, and an- was always freely accorded to his projnexions.” Even in his conduct of the ects. Long before he had brought his unhappy Darien scheme a certain men- Darien plan to public notice, he was tal breadth and magnanimity are plainly widely known for his proficiency in discernible. He was a free trader in those subjects which are now included an age when protection reigned su- under the general term of political preme, when almost every great enter- economy. He was not discredited even prise took the form of a monopoly. It by his failure in Darien. In later years showed a still more notable superiority he was elected a member of the United to the prejudices of his time when he Parliament as the representative of the determined that in the colony of Darien Dumfries boroughs, and until the end
differences of race or religion were to of his life he maintained an active adbe made nothing of." Nearly two cen- vocacy of those principles of finance turies before the Panama Canal of M. which observation and experience had Lesseps was projected, Paterson had taught him. considered the possibilities of such an In the year 1694 Paterson published undertaking, and had written concern- a pamphlet, entitled, “ A Brief Account ing it, that three-fourths of the entire of the Intended Bank of England,” in distance across the isthmus consisted of which he writes with authority on the
so level that a canal might easily views of its founders. In contravenbe cut through,” and that the remainder' tion of the assertions of its opponents,
he contended that the interest of lied, their annuities were to be divided money would be lowered by it, and among the survivors, until their numtrade developed ; and it is worthy of ber should be reduced to seven, when notice, that he put very clearly the the remaining annuities as they fell in necessity of an ample metallic reserve, were to lapse to the government. It
a point on which discussion has been may be interesting at the present juncso lively in recent years.
ture to note, that in order to secure Paterson became one of the twenty- these annuities, it was found needful to four original directors of the bank, and impose new duties on beer and other held £2,000 in its stock. A year later liquors, a resource which our financiers he sold his stock, and resigned his po- do not yet appear to consider exsition on the board, the account which hausted. The Million Loan was the is generally accepted of the severance starting-point of our national debt. being that, in a difference of opinion Montague was the first chancellor to with his colleagues upon important issue exchequer bills, a convenient points in the bank's operations, he was form of negotiable paper which has outvoted, and considered it necessary held its ground ever since, although to emphasize his protest by with it is not now issued for the small drawal. The story shows that he was amounts, varying from £5 upwards, not merely concerned in the first de- which at that time found favor. They sign, but for a time an active sharer in met a great necessity in the years of the bank's administration.
the re-coinage, when currency of any When the scheme had so far pro- kind was scarcely to be had. The gressed that it could be brought before small exchequer bills, therefore, which the House of Commons, statesmen bore interest at the rate of threepence were fortunately found capable of per- per cent. per day, were eagerly welceiving the advantages that might ac- comed, and the monetary pressure was crue from it both to the government much mitigated by means of them. and the community. Undoubtedly the Montague was a young politician, but most obvious point to them was the his youth, coupled with the wonderful benefit which the administration would successes of his parliamentary career, reap in immediate financial assistance. only better fitted him for a bold innoYet this obvious gain, as has been vation. In the course of a very few already said, was in one way a bin- years after his entrance into public life drance to the adoption of the measure he rose to the bighest positions which by stimulating and embittering the ef- the House of Commons had to offer, forts of the Opposition. It was by the and the ease and rapidity of his rise skilful tactics of Charles Montague, must have given him the confidence aud by the exercise of his then unri- which is so powerful a reinforcement valled authority in Parliament, that to ability. He was an opportunist in these difficulties
surmounted. the best sense of the word. If not a The name of Montague is entitled to mau of the highest originality of mind, stand high in the illustrious list of the he was quick to recognize and turn to finance ministers of the country. He good account the ideas and teaching of became chancellor of the exchequer in men of genius. This is the proper April, 1694, and the passage of the work of a statesman. As Macaulay Tonnage Act in that year, containing truly says, “We can scarcely expect
, clauses which assured a charter to the to find in the same human being the bank, only confirmed a reputation al- talents which are necessary for the ready earned by him for financial in- making of new discoveries in political genuity and astuteness. In 1692, when science, and the talents which obtain a lord of treasury, he had devised the the assent of divided and tumultuous Million Loau, raised by an issue of life assemblies to great practical reforms." annuities to which he added the attrac- In fact, the relation between Montague tion of a tontine. As the annuitants and Paterson, with the other promoters
of the bank, is a typical example of the powerful advocates in high places. It usual course of political reforms in a is to his everlasting credit that, fortified free country. It might not unfairly be by the counsels of such men as Somers, compared to the relation between Cob- Newton, and Locke, Montague could den and Peel in the abolition of the not be drawn into this folly. Corn Laws, with the exception that The ultimate success of the bank Montague was not a late and reluctant could not, however, be secured by the convert, but a sympathetic coadjutor. approval of Parliament or by the The pioneers, the discoverers and ad- prompt subscription of its stock, but vocates of a new or neglected truth, had to depend on the wisdom of those who prepare the public mind for its who were charged with its management reception, are entitled to all honor, but after the initial difficulties had been not to the exclusion of the statesmen overcome. We have the amplest eviwho discern the proper moment for dence that no great institution was ever giving it effect in legislation. Both happier in the character of those who fulfil an indispensable function. In presided over its birth and directed its the history of the r'e-coinage of 1696-8, earliest years. The original directors perhaps even more clearly than in his were among the leading merchants and management of the act establishing the the most influential citizens of London. bank, we can see the stuff of which No fewer than seven of the twentyMontague was made.
four were chosen, between the years The re-coinage in William the Third's 1696 and 1719, to fill the office of lord reigu was a heroic business. The cur- mayor ; two others were members of rency bad fallen into a condition that Parliameut. There could not have made it not only a disgrace, but a posi- been found anywhere a body of men tive danger to the country. It was better qualified to conduct the new worn and clipped to such an extent as institution. They were the moneyed to have fallen to less than half its men of the community ; they were proper value; and its restoration could thoroughly skilled, by daily practice, not be accomplished without an ex- in matters of commerce and finance ; penditure that must have seemed in and they knew, as well as any could those days appallivg. The actual cost know, with which of the merchants and exceeded £2,700,000.
6. Such a sum,'
,"traders of London it was safe and desays Thorold Rogers, was nearly sirable to do business. Some of them, equivalent to a year and a half's ordi- too, were able to defend with literary nary revenue, and was as serious at the skill and effect the principles on which end of the seventeenth century as a the bank was based. The most distinpublic loss of a hundred millions would guished of them all was Michael Godbe at the end of the nineteenth." So frey, the first deputy-governor, whose soon as the necessity was fully rec- name would be remembered even for ognized, the problem was faced by the ability of his writings if it were not Montague with boldness and prompti- still better known by the tragic circumtude. To devise the means of such a stances of his death. He clied in the provision tasked even his ingenuity, trenches at Namur on the 17th of July, and laid a tremendous burden upon 1695. Along with two of his colleagues, the struggling nation ; a burden, how- he had been sent to the king's headever, which was cheerfully borne when quarters in Flanders, in order to make it became evident that the expenditure arrangements for the payment of the would bear fruit in prosperous trade. troops. On the day of his death he It was a still greater triumph for Mon- had dined with the king in his tent, Lague, ihat he defeated the cowardly and had accompanied him out of curiproposals of the currency fanatics of osity into the trenches, where he was Iris day. The debasing of the currency, struck down by a cannou-ball. His by lowering the weight while retaining death was regarded as a grave national the denomination of the coin, found loss, and brought about a fall of two